Kasper Wichmann
Welcome to Balentic Edge. Today, we’re joined by Simon Powell, one of the most thoughtful voices on thematic investing in financial markets. This conversation builds on our very first episode where we explored why themes are driving long-term private capital flows. This time, we’re zooming in on one of the most investable themes of all, energy transition. It’s a $1.8 trillion market reshaping infrastructure, power, mobility, capital allocation, and it also happens to be the first major theme we’re launching on Orca, our platform for connecting LPs and GPs. Simon is an established equity research analyst with more than two decades of experience analyzing various sectors and themes. He has authored numerous research reports on topics including climate change, alternative proteins, video gaming, demographic shifts, metaverse, Chinese property markets, Chinese internet crackdowns and a lot of other things, not least energy transition and water scarcity. Simon is also very well known for his views on China and the Chinese economy, where he questions the consensus views on China. His thematic research has identified five key megatrends that drive up to 20 global themes. On top of all of this, Simon has built model portfolios to track each theme and can talk about which companies are most leveraged to each of the themes he follows. Simon, very welcome to Balentic Edge.

Simon Powell 
Thank you. Nice to be here. Happy to help.

Kasper Wichmann
Thank you for taking the time. Looking back at your career from CSLA to UBS to Jeffreys, what’s the one lesson or moment that changed how you approach investing?

Simon Powell 
You know, being a research analyst is probably one of the best jobs in the world because you really get to do deep dives into stuff that interests you. But I learned really quickly, it isn’t about how good your model is at forecasting earnings. The most important thing is figuring out what’s in the price. You know, there are so many analysts telling you what they think company XYZ is worth and they look deep into their spreadsheets the answer isn’t in the spreadsheets. The answer is in what’s the consensus view about what’s already priced in and therefore what’s not in the price because that’s how you generate alpha. So, you know, it’s all about alpha generation and what’s in the price. That’s the one thing I would tell anybody in finance to try to figure out what’s priced in and what’s not priced in.

Kasper Wichmann
Simon, can you put that price and alpha into the context of energy transition for us?

Simon Powell
Yeah, I can. know, being a thematic investor, I tend to come top down, 30,000 foot and then come down. I have played roles in the past where you come bottom up and in many ways to make good investment decisions, you need to do both things. But if I think about energy transition, what is energy transition? Well, it’s something to do with climate change. It’s something to do with avoiding one and a half or two degrees of warming, whatever the IPCC says, And when you boil that down and ask the question, what does the world have to spend or invest to avoid this you can back out how much money the world needs to spend to do that by basically saying, well.

These are the decarbonization paths And how do we travel down these decarbonization paths? We’re gonna need to invest. I did a bunch of work that said that’s something like 50 plus trillion dollars between now and 2030, And then it’s a bunch of investing after that. 50 trillion dollars is a big number. And then you figure out where do we need to spend all of that? Which of these sectors that that flows into? That’s where the rubber hits the road in terms of energy transition, because you then have these big buckets of potential future capex that’s required and investment. And then you think about it from a geographical sense as well in terms of which are the major geographies where those investments will happen. And Asia was a key part of that, which was why it was so interesting to be based in Asia.

When we were writing about all of this stuff. And then think about the interlinkages, Demographic is a key part of energy transition, food security. All these things are all related and in many ways, all these themes work together.

Kasper Wichmann
So if an LP in the private markets wants to pursue this as a topic, where do they start? How do they break this down systematically? Can you help us with that?

Simon Powell
Yeah, I can. So as I said, you can look at that $50 trillion and it’s easy to see where the big buckets are, right? It’s electrification of everything. Then it’s, reformatting the transportation sector. So it’s not just cars, it’s planes and ships and everything else. And then it’s industrial processes and manufacturing. so an LP needs to figure out where they think there’s value. And so goes back to what I said, what’s priced in and what’s not priced in. Now, what’s interesting to me, and it’s still the case today, that certain parts of decarbonization appear to be in the price. look at public markets and say, what’s the P/E ratio of conventional automotive manufacturers today? It’s low single digit, right?

What’s the P/E multiple? What’s the peg number that’s implied in certain public market EV manufacturers? Well, it’s a high number. But actually, the number, the companies that are going to solve this climate problem, I would argue that the real growth is not yet priced into those stocks. So there’s upside potential in various sectors. Now,

In the sexy stuff like we just talked about in EVs, we’ve been through a period where valuations were high, but they still weren’t pricing in avoidance of two degrees of warming. Why? Because the kind of adoption rates you need to see in EVs, for example, are stratospheric higher than the current adoption rates that we’re currently seeing. So you can see where the headroom is for Alpha in some of those names.

On the short side, you can see that the market’s pricing in the end of the coal industry to some extent, right? You can see that the markets in general are pricing in the demise of certain industries, but they’re not necessarily pricing in the stratospheric growth that you need to see to avoid the two degrees. So I think the markets are schizophrenic around energy transition, which is why investors see huge potential. Like there’s a big pot of gold at the end of this rainbow, but you’re going to have to do an awful lot of work to generate that alpha because you really need to be sure that the timeframes over which this is going to play out. Remember this? said, okay, world wants to avoid two degrees of warming by 2050, if that’s the date. That’s still a long way away. And for most investors, those are unusually long time horizons to make investments over. So that’s why it’s so exciting. Now, you’ve asked me, where should people be looking? Well, think they need to create a portfolio along the entire spectrum of solutions. How are we going to make this energy transition? Well, everyone knows about wind and solar. Everyone kind of knows about EVs. But then you’ve got some blue sky stuff like carbon capture and storage.

Where nobody knows how that’s going to work or even how it’s going to be paid for. So that comes with much greater risk as an investor. And in fact, many investors are saying, we’re going to leave that stuff to governments to pay for, right? So here where I’m based in the UK, the only people involved in carbon capture and storage are government backed entities because the bill could be massive and no one knows how to make a return on that. But back to your question,

I think investors need to look at all of the elements that are required and take a portfolio approach. Well, we want to have X percent in green tech. We want to have Y percent in carbon capture and storage. But we also want to have some investments into stuff that can generate alpha around mitigation, because one thing we haven’t said is maybe we don’t avoid two degrees of warming. Maybe we we end up with three or four.

Well, there’s alpha to be made in benefiting from the effects of climate change. One example, dam wall building, right? So if we see the sea level rises that some of these scientists talk about, I’d like to own companies that are leveraged to mitigating sea level rises. There’s some big infra projects with big margins keeping the sea out of lower Manhattan.

Someone’s going to a big check to prevent that. So investors need to look everywhere for alpha.

Kasper Wichmann
Is this “everything not being priced in” do you think this is why private markets seem to be particularly well positioned for taking advantage of this investment opportunity?

Simon Powell 
I think private markets are a position because, you know, private markets have lockups. They can be longer dated. And as I highlighted, I think this is a long dated theme. We know this is a theme that’s going to play out till 2050 at least. And when I look at other themes, they stretch out over different horizons. So I think some private markets are well placed for that in terms of setting up their funds in a way

that match those time horizons. I think they can be much more patient sometimes than public capital can be. We all know that and patience is what’s required here. So yeah, I think those are probably some of the more obvious reasons. I guess as well, some of this energy transition to me reflects

what you might see in traditional infrastructure investing and private markets have liked infrastructure investing in general. And so there’s a strong overlap there when we think about large infrastructure projects, large wind farms, large solar farms, large battery factories, et cetera, that type of infrastructure with potentially predictable cash flows going forward. And

some of the plays in energy transition are relatively high operating margins. Like a wind farm, it might be a low return on invested capital, but it’s a hell of a cash flow generator. And we know that private markets love those dependable, predictable cash flows if they can get them. So I think there’s an element of energy transition that’s attractive to them in that case. I think in many ways, it isn’t about

private capital having a strong green or ESG bent. I think there are private markets out there that have that sort of moral view of money, but I just think private money is attracted to this for the cash flow. Does that make sense?

Kasper Wichmann
Absolutely, I think it does. And this is also why one of the things we assess probably with particular diligence, as LPs is how much if any greenwashing is actually going on.

Simon Powell 
Yeah, the world has changed a lot, Kasper, in the last three, four years around this ESG scoring and all that stuff, I think that’s all up in the air right now with both public and private investors. think that was, you know, pre-2020, that was stuff that people worried about. I think people worry about it a lot less now because I think,

It’s gone mainstream, but also being skewed towards ESG and ESG scores caused some people to make some big mistakes, right? And when the Russia-Ukraine thing happened, that blew up a bunch of ESG funds. Why? Well, because some people were overweight. Gazprom. Gazprom had quite a good ESG score. you know, in the public markets where I spend more time, people were crowded into that.

stock and yet actually they blew up their funds as a result of being focused on big, you know, on attractive ESG scores, whereas really they weren’t looking at the geopolitical stuff that goes with it. And geopolitics is another big theme that people need to factor into this energy transition story because everyone knows what’s happening from the US perspective.

Kasper Wichmann
from a European perspective, we’re still very much captive to this. The SFDR still stands. Public investors are still required to invest preferably in 8, 8 plus or 9. I don’t think that’s going to go anywhere.

Simon Powell 
Well, yes, but keep an eye on the politics, right? Because politicians are sniffing the wind and popularism says, if people want to, governments want to do U-turns on net zero, change their net zero targets, stuff that people committed to. And I think that the regulatory environment is something that puts a lot of this energy transition returns at risk.

and back to your first question, where should people invest? If investors are relying on government policy to deliver change by a certain timeframe and that government policy shifts because the political landscape is shifting, then it can change the entire return for the project. And so EVs are a classic example of that, Governments are saying we need to mandate

all new cars by 2030 can be electric, we see the UK government backpedaling on that, right? We see people changing the dates and that’s going to show up in terms of adoption rates of EVs and that’s then going to show up in returns for certain projects. So investors should be very cautious of baking in government policy as being a given because as we saw from, Mr. Trump tearing up,

the Inflation Reduction Act, those returns that were predicated on certain things happening in certain timeframes, change of government, someone tears up that policy and before you know it, your project is not as IRR positive as you thought it was.

Kasper Wichmann
As an investor, how do you grapple with this? Because this policy risk permeates a lot of energy and transition. How do you approach this if you’re sitting investing for a pension fund?

Simon Powell 
I think you have to start from the position of, need to make this project, this investment make sense without government policy. So can I make my numbers work without government policy? If I can, and government policy comes along and accelerates something or provides an advantage, well, then that’s upside to my investment. So, you know, I used to tear my hair out

with autos analysts getting super bullish on certain auto names because, look, all these governments agreed to this kind of policy. And I would say, well, you can put it in your base case, but you better show investors if that policy goes away. This is what the valuation could be. So the best advice is find sectors where government policy isn’t required.

there are examples out there, there’s no real government policy yet on sustainable aviation fuel. there are industry expectations, but we’re not seeing governments mandate a certain amount of sustainable aviation fuel by a certain date. So,

If you can find a project that’s working within that space and then government policy was to come along later. So that’s one example. The same is true in the marine shipping industry. And this is something not a lot of people know. When you add up all the carbon that’s produced in the world and who produces it all.

It doesn’t actually all add up. You take all the world’s carbon production, all the industry’s carbon production, the two don’t match. And what’s the difference? the difference is two things. One is defense, which is always excluded. And the second is marine shipping. Why? Because it doesn’t sit within a specific country, It’s outside of country borders. So all those container ships traveling around the world, burning heavy fuel, oil, et cetera, producing whatever emissions they produce, doesn’t get caught.

No one can actually pin it on a specific country because it’s just outside of country boundaries. So again, there’s no real government policy here around we’re going to be X by Y. So I would tell people to look at energy transition in the marine transportation space. That’s a good space to look as well because again, if you can make the project work or you can make the investment work, government policy might come along in the future and act as a bit of a tailwind.

The same is true for all of this thematic investing, to me, thematic investing is looking at an underlying theme that can grow your EPS CAGR faster than a normal EPS CAGR growth. So you know this as an investor, you say, well, we think that earnings per share can grow at 8 % CAGR for the next 10 years, but a theme comes along

and makes it grow at 10, that’s what you want. You want that tailwind that blows for 10 years and gives you an extra number of basis points in CAGR growth on EPS, and the rest flows through to alpha from the investment. So look for stuff that can stand on its own two feet without government policy. But unfortunately, a lot of people have been crowding into investments that rely on government policy.

And as we’ve seen, government policy can go away and geopolitical tensions and trade wars can blow up your investment pretty quickly.

Kasper Wichmann
How much of this is actually momentum?

Simon Powell
That’s something that I can’t really answer, but I have looked at and I haven’t been able to figure it out yet. stepping back, a lot of people when I was working in public markets used to ask me about a specific theme, is it priced in? let’s take something not related to energy transition,

something like aging as a theme and say, it in the price or not in the price? The way to think about the amount of money flowing into a specific theme, there’s two or three ways of doing it. Look at how many ETFs are springing up with that specific theme as their main factor of the ETF. Same with closed funds, same with actively managed funds. You can track how much money

AUM is flowing into those on a quarterly or yearly basis. And so, yes, you know, when the likes of Cathie Wood was around, there was a lot of hot money flowing into certain themes like genomic medicine, like aging, like EdTech. There’s always been a far greater flow into energy transition than into some of those other themes. But why is that?

partly because there’s way more things to invest in because when I talk about energy transition, it’s probably the biggest theme that I ever looked at. It’s way bigger than some of these other themes because it covers everything. You talk about telemedicine as a theme, talk about the metaverse as a theme. These are interesting, but they’re much smaller in terms of dollar values. And so, has there been a…

a huge amount of money flowing into energy transition, yes, but that’s because the size of the prize is so big. $50 to $100 trillion of investment between now and 2030, 2040, that’s a really big number. Well, it’s still only 3 % of global GDP every year when you cumulatively add it up, but it’s still one of the biggest themes that’s out there, And so that’s why there was…

a lot of momentum money flowing into it and will continue to flow into it. But I think some investors have been burned in this theme. The returns haven’t been there that people expected. And so potentially that will slow down. But when you look at money flowing into ETFs, energy transition is still getting a big chunk of the main flow.

And the ETFs is one way of assessing that momentum.

Kasper Wichmann
But then the big difference between an ETF and private markets is, in private markets, if you’re riding momentum and it stops, you can’t get out.

Simon Powell
Yeah, you can’t get out. I think that’s a problem that private markets have right now in lots of their investments is what’s the exit here for these things. And the appetite for public markets for energy transition is probably diminished, partly due to Mr. Trump, but it was diminishing before Mr. Trump, because, like I said, the Russia-Ukraine event blew up some of these ESG funds because

they were crowded into certain ESG stocks.

And I think smart money is seeing that the political landscape is shifting in terms of energy transition. I mean, I’m sitting here in the UK and there are politicians here saying, we’re going to do with these social programs and the way we’re going to pay for them is we’re going to walk back on our net zero commitments. Because net zero commitments are costing people money, ⁓ Cost of living, et cetera, et cetera. look, way back,

Kasper Wichmann
cost of living.

Simon Powell
This is my own personal view and I’m sure it might upset some of your viewers, but I’m not convinced that the world is at all serious about avoiding one and a half or two degrees. you just don’t see it. If the world was serious about avoiding one and a half, two degrees, it would be decarbonizing at a significantly faster rate than it is. And I would argue that collectively we’re not actually decarbonizing.

COVID caused some decarbonization because the economy slowed down. We’re probably not growing as fast as we were because global economies aren’t growing as fast. China’s turning the corner slightly, but frankly, we’re nowhere near where the IPCC say we should be to avoid the one and a half or two. And so if I had a very long dated fund, I’d be leaning a lot more towards mitigation.

than energy transition right now. Because if I was betting, we’re not going to avoid it. We’re not going to avoid one and half or two. And you don’t need to be an expert to know that. Most people just need to look out the window, right? And say, hey, it’s hotter and the weather’s changing and blah, blah. So.

Kasper Wichmann
Or look at how we live, Simon, because not a lot has changed that way here for most people. And we don’t see things beyond a time horizon of one to two years at the maximum. So why worry?

Simon Powell
Yeah, yeah.

No, no, that’s right. And so the IPCC will continue to bring out reports and their decarbonization curves will get steeper and steeper and steeper. they may be wrong and the scientists may be wrong. Who knows? But if we believe them, then we need to decarbonize much quicker than we are doing. And if government policy can’t mandate it.

It’s strange, you you can’t see it, but just behind me on the wall here are some front covers of some sell side reports that I wrote. And way back when I worked at CLSA, I wrote a report called Panic Button and basically said that maybe there’s a future where governments do nothing until climate change starts to really

have some significant impact and then they’ll hit the panic button. And what did I mean by that? Basically we’re saying you could wake up one day and they might say, look, it’s illegal to turn on that coal-fired power station. And if you turn it on, we’re going to put you in jail, You Mr. Private Equity owner, it’s illegal for you to dig up any more of this fossil fuel. will we ever get to a place where politicians

basically strand capital in some of these industries. We might get there, I don’t know, but people do need to think about where we end up with this. But my personal view, think business as usual, some degree of decarbonization, but investors should definitely think about generating alpha from mitigation.

Kasper Wichmann
I want to touch upon that, This shift from fighting climate change, into mitigation, adaptation, resilience. Is that really what’s driving the momentum within energy transition now?

Simon Powell
I don’t think that realization is fully there. think money takes a long time to change direction. Because your ultimate asset owners in the private markets, somewhere there’s an investment committee that makes a decision to invest in something, Or they make a decision to not invest in something or to change direction. Those things don’t happen overnight.

I don’t think the ship has turned yet. I think it’s pursuing what it was pursuing a few years ago, the Inflation Reduction Act, think Mr. Trump was elected six months ago, So the trade war, blah, blah, but even before that. So no, I don’t think we’ve seen a full scale.

change in direction of this large vessel away from energy transition towards climate change mitigation yet. So that’s yet to play out. it’s pretty hard to tell the ultimate pension owners, we’ve changed our minds. We’re no longer pursuing this. We’re avoiding two degrees. We’re actually saying we don’t care what the

It’s going to be four degrees and we’re going to change direction. That’s a difficult thing to sell to people,

Kasper Wichmann
On that, what is the risk then to investors of pursuing a theme that might be changing, particularly in long dated assets, private equity, infrastructure, et cetera?

Simon Powell
think that that applies to all themes. the good news is, though, that it’s not binary. I think like most themes that I look at. Yes, the direction might change. but once capital is being deployed, that capital doesn’t just get turned off. once you build a wind farm, it’s going to.

be like an ATM machine in your front garden for 25 years. The question is the incremental stuff. I’m working with some organizations at the moment that are in the energy space.

They own some gas distribution networks, but they also own some Poles and Wires electricity distribution networks. Now, there’s a big debate. Does gas play a role in the future or is gas and energy transition fuel as we transition to something else? Well, if you own both, then you’re hedged because if the gas thing turns off, the value of that asset will diminish, but the value of the Poles and Wires business will go up.

because, well, if we’re not going to burn gas, we’re going to burn electricity. So I see investors who are nicely hedged against all of these different policy shifts or investment momentum shifts. It’s just the same as investing in anything else. It’s the same principles apply.

Kasper Wichmann
You touched upon exits. There have not been many in the last couple of years, and I think that goes across private markets for various different reasons. How do you see GPs in private markets unlocking liquidity?

Simon Powell
probably it’s going to happen through M&A. I do see large infrastructure conglomerates on the public side buying up these cash producing assets. OK, so so everyone’s still looking for yield. I mean, even though even though Treasury yields are up.

investors are still seeking yield spread between what their weighted average cost of capital is and whatever they can get in a return on invested capital. And providing some of the assets, these energy transition projects that sit within these private markets are cash generative, then I think there’s M&A. I think there’s an opportunity for people to buy those projects on a standalone basis.

So I think there are exits, but there’s only exits for the good quality stuff, the other stuff that was more cutting edge, that’s going to be hard because who’s gonna buy these things? So I’m not smart enough to tell you the answer to that stuff. And in fact, we were talking about this before we came on here. I worry about…

how much of the world private equity is already consumed. Like it’s almost tried to buy everything. ⁓

Kasper Wichmann
No,

let’s dive into that, Simon. You have a contrarian view on private equity. Do you want to add a bit of color on it?

Simon Powell 
Yeah. Yeah.

Yeah, well, yeah,

I will. I’m a bit of a dinosaur. I’ve been in finance markets a long time, but always on the public side. And so maybe some of my comments come from a position of I’ve never been in private equity and maybe deep down I wanted to spend some time in it, but never had a chance. I don’t know. So it might come across as sour grapes. But for me, sitting where I sit,

And I speak to a lot of people around the world and anecdotally I hear things. For example, I was hearing that private equity had been buying up car washes in middle America. And I sit here in my little home office or in offices in London and I ask the question, what do PE guys know about running car washes or hairdressers or dentists or any of these things, Do these businesses really belong in private equity? It’s great for the guy who sold the car wash.

But when you look at where private equity has gone, you do get the impression, are they trying to consume the world? are they really trying to buy everything? And how does it all end? I’m not smart enough to figure out how it ends. But I do think that private equity has ventured into some businesses where

It can’t add any value, other than putting up the ASP. So as a consumer, I see this, I go into franchise restaurants and I kind of know that they’re owned by private equity. And I go, well, the only way they can be expanding the margins is by putting up the ASP, putting up the price. and as I said, I think one day we might get to a stage where some private equity guys are sitting in front of.

parliamentary or congressional hearings answering for what’s happened. I don’t know where it ends. my point is as a public market guy, I look at this theme and I go, well, I’m a contrarian. I look at the valuation of certain listed private equity.

companies and I kind of go the valuations are rich and if they can’t sell things then maybe the share price will go down I think private capital plays a fantastic role in lots of industries and in my investing career I’ve seen private capital come in and do really, really good things for really, really promising industries. Be patient.

Smart people really help. But I question it when I hear of private money going into stuff like car washes.

Kasper Wichmann
Simon, what’s the biggest risk to energy transition investing that nobody’s pricing in right now? What are we overlooking?

Simon Powell
Well, I mean, we talked about the policy thing and I don’t think they’re overlooking it, but I think people are underestimating how much of a policy shift we could see, I’m talking politically here. I’m not just talking Mr. Trump. I’m saying all across Europe, the average person on the street may not want to pay for energy transition and so there might be some big U-turns on policy shifts

I think people are overlooking that. But that’s the negative side. On the positive side, and I learned this, you asked me what I learned in my career. One of the things I learned was what’s priced in. Prior to being in finance, I worked in management consulting, and a really smart guy once told me that, Simon, you know, we all know that the Easter bunny comes once a year, but the technology bunny comes every night and leaves you something and

you don’t realize how quickly technology changes. so as I now look back, I realize just what that person was telling me. so on the positive side, people are underestimating technology shifts and how quickly they can happen. So I think investors are underestimating the policy, which can be negative for them, but at the same time, they’re underestimating the technology breakthroughs that could be hugely positive.

hugely positive for new industries, but could massively disrupt industries that are already invested in. we’ve seen the solar panel prices come down. We’re seeing the wind turbine prices coming down. I think we can see the price of other energy things really come down. And I do think you’re going to see huge technology breakthroughs in terms of nuclear

I think you’re see huge technology breakthroughs in terms of decarbonizing and power reduction and energy efficiency. And those aren’t in the price yet. So that’s the good news for investors who are in the right spaces. so nuclear, take a look at some of the price action on public nuclear stocks recently. And that tells you what you need to see.

Take a look at the price action on platinum and palladium in public markets. And that tells you, think, what some investors are betting on, which is technology breakthroughs around catalysts. So those are the two things. One’s negative, one’s positive.

Kasper Wichmann
I think point in case of what you just said is perhaps artificial intelligence. Very, very power hungry, even if the power of the man may go down over time. And on the other hand, it is going to enormously disrupt an awful lot of industries.

Simon Powell
Absolutely. It’s disrupting almost everything. Far quicker than people imagined. But the technology bunny comes every night and leaves you something and you don’t realize that he’s left it. And so just bake that into any investment that you when you’re sitting there looking at a model, trying to figure out whether this is going to be a good investment or not a good investment.

Just think about the nuance of how technology can actually improve the alpha that’s going to come from that investment.

Kasper Wichmann

Simon, the biggest energy transition story in the last five years, what would that be

Simon Powell 
I think the biggest thing is definitely what’s playing out in the EV space. Everyone knows China is trying to become the Saudi Arabia of the battery space. think the markets have almost decided that it’s a done deal, that China is just going to win in the battery space.

But I’m always skeptical of picking the actual winner. So the EV one is the obvious one. But I think the other big thing in the last five years on the energy transition space has been the, the way that North America is in. Out in again. So was in.

Mr. Trump came and they were out. Mr. Biden came and they were in again in the Inflation Reduction Act. Now they’re out again. So that in out in out of North America is probably one of the most disruptive things in energy transition. But quickly markets seem to be looking through Mr. Trump already and saying, well, it’s still the direction of travel.

Markets are looking past some of the stuff that he says they’re spooked and then they’re not spooked. So that’s probably the biggest disruption right now in the last five years has been North American policy.

Kasper Wichmann
Thank you, Simon. Thematic investing isn’t just about trend spotting. It’s about understanding where the world is headed and how private capital can lead that change. It was fascinating talking to you about the opportunity, that not all opportunities priced in and that’s where we should be looking, but also that there is a significant amount of political and geopolitical risk.

Simon Powell 
Yeah, yeah.

Kasper Wichmann
And we need to think carefully about this and where it’s embedded as investors, both LPs and GPs. And really in particular like the technology bunny comes every night, because that’s also worth for a lot of investors to think very carefully about as we deploy our capital.

Simon Powell 
Yeah, that’s right. And then, where does private markets end up in 10 years time? That’s an interesting theme in itself.

Kasper Wichmann
Yes, very true. Simon, thank you for joining us on this episode of Balentic Edge. It’s been fascinating to walk through energy transition as a theme with you.

Simon Powell
Good luck. Good luck to what you guys are doing.

Kasper Wichmann
Thank you and thank you for joining us on this episode of Balantic Edge, also to our listeners.